2021 International Development Goes Online in the Pandemic

2020 has been a challenging year for the entire global franchise community as the Covid-19 crisis has changed how we seek new international licensees. International travel to countries stopped in May. To meet new licensee candidates, we had to resort to videoconferences. Due diligence on candidates became remote. Discovery days to have candidates meet the franchisor team and see face-to-face the resources the franchisor would provide either did not happen in 2020 or were done virtually.

One of the biggest challenges has been overcoming cultural differences between countries. While some Western countries were in the past open to having the first meeting be by phone or even video, based on my 46-year career doing global business, most cultures require you first visit, meet face-to-face, and build a personal relationship before any business could be considered. Much to my surprise, in 2020 we were able to do first candidate meetings virtually in Colombia, India, Japan, Panama, and Peru. We were also able to do licensee candidate discussions, and even negotiations, virtually for Australia, Cambodia, Italy, Korea, Spain, and the United Arab Emirates.

In fact, this change has been beneficial in that it allows us to eliminate unqualified candidates up front and then to meet with only the best ones when we finally return to international travel. We continue to believe it is necessary to eventually visit a country before awarding a license to see the market, meet the candidate’s team, and see their current business.

For a look into best practices going forward, I asked some highly experienced international development executives to comment on the future in their countries and regions.

Ray Titus, Founder and CEO, United Franchise Group

“As we all know, 2020 represented some of the toughest challenges to ever hit businesses, especially in the international arena. There were just so many negatives hitting everyone. It was hard, but we managed to move forward and sell some master licenses. Since everyone was dealing with the same issue, we completely understood that part, but what most were missing were the positives, and we pounded the positives! This is the best time we have ever seen to buy a business. From finding locations to negotiating with landlords, from finding good employees to less competition, we changed the narrative. When vaccinations were first mentioned, all leads got the update. When the cases were going down, all leads got the update. What helped sell even more was that some of our franchisees actually were doing better in 2020. We set up calls, talked about how we pivoted the business, and the franchisees helped explain how it worked. Today our brands are all up over pre-Covid numbers, and we are looking at 2021 being our best year ever.”

Iain Martin, The Franchising Centre, United Kingdom

“In the U.K. and Europe, 2020 has been a challenging year. Master franchises have been awarded, but in very specific sectors (e.g., specialist decontamination/cleaning services). Traditionally, one of our regular growth areas has been successful food and beverage MUMBOs (multi-unit, multi-brand operators) taking on additional brands. But most have been focused on adaptation and survival and have deferred investment decisions. The one exception is for brands where there is a strong delivery/takeaway component. There is money available for investment, and once the landscape becomes more clear, I am confident that successful brands will be introduced into new markets once more — but likely in sectors that can thrive with or without a pandemic!”

James Liu, FranChina and Edwards Global Services (EGS), Beijing

“The epidemic in 2020 significantly slowed down the willingness of investment in physical store business in China. Education is the most affected sector, where online classes will continue growing to replace the offline, in-person teaching when relevant technology is available and in place. Franchising will be more popular in low-tier cities, where in high-tier cities brands prefer to build and run company-owned units. In summary, every business must adapt itself to the online model, which means the majority of customers will be coming through an online channel in China. New technology will definitely change the usual way of doing business, and franchising will not be an exception.”

Martin Hancock, COO, World Franchise Associates

“While 2020 was certainly a trying year for international business, it has not been all doom-and-gloom. It’s important to understand that not all businesses have suffered as a result of the pandemic. In fact, some have increased revenue, while others understand there is pent-up demand for their products or services that will be realized once Covid vaccines are widespread and restrictions lifted. The international deals we saw close in 2020 happened because both franchisor and franchisee were able to look through the current situation and understand the opportunities that exist on the other side. These include a changed real estate market, an increased pool of available talent in the workforce, and a predicted economic upturn post-pandemic. Importantly, we also saw a strong uptick in inquiries from potential international franchisees in Q3 and Q4. Our outlook remains optimistic. We believe franchised brands in all sectors will see increased demand for international development in 2021.”

Sean Ngo, VF Franchise Consultants, Vietnam

It has been a very interesting year in franchising and business in general to say the least! The impact of Covid-19 has been felt worldwide, and certainly here in Asia. Like many consulting businesses, our company relied on frequent travel throughout Asia as a core part of our services, which included organizing franchise business matching events and discovery days in major cities across the region.

In light of the pandemic, traveled ceased abruptly and we had to adjust quickly and embrace the fact that digital sales and marketing would be key to our success in 2020. Instead of in-person business meetings in various cities, we significantly increased our efforts and shifted our budgets toward the virtual world. We experienced success serving our franchisor clients throughout Asia last year because of the following initiatives we undertook:

• In-person international franchise business matching events and expos, such as the recent expo in Vietnam
• Webinars promoting each franchisor client, often in the format of a virtual discovery day and interview-style webinars
• Participation in virtual franchise shows throughout Asia
• Social media marketing, both organic and paid ads
• Targeted email campaigns
• Periodic written and video blogs focusing on various clients and franchise segments

Bottom line

While we predict 2021 will be a year when franchise development will be strong in many countries, most candidate identification, due diligence, and communication will be done by virtual sessions this year.

William Edwards is CEO of Edwards Global Services (EGS) and a global advisor to CEOs. From initial global market research and country prioritization to developing new international markets and providing operational support around the world, EGS offers a complete international operations and development solution for franchisors based on experience, knowledge, a team on the ground in more than 40 countries, and trademarked processes based on decades of problem-solving. Contact him at bedwards@edwardsglobal.com or +1-949-224-3896. Read his latest biweekly global business newsletter at www.geowizard.biz.